Earlier this week I was invited by Professor Bill Morris to be a guest speaker at his business strategy class at the UCI School of Business.

Since the class focuses on starting a business, my presentation introduced students to licensing, how it works, and why it’s a game-changer for helping a startup to succeed in the marketplace.

With so many new technologies entering the market so quickly, most startups today only have a very short window to successfully develop and get their IP into the market. And one of the fastest ways to get new technology into the market through a licensing partnership.

Here are some highlights from the presentation:

Just about every startup today has intellectual property. In fact, that’s what most investors look for in startups. IP creates higher valuations, and studies show startups with IP are more likely to get funded, less likely to fail and have a higher survival rate. I shared stories about of some of the most successful companies today that were founded using licensing including Microsoft and Google.

Next, I shared why licensing is a strategy that every startup needs as part of its overall business strategy. There are the two ways startups can use licensing – to acquire IP and to license out IP. Licensing out is a strategy to partner with bigger companies to gain market access and other resources. Licensing in is a strategy to get IP if you don’t have any or a way for a startup to build instant product recognition in the marketplace.

I discussed the difference between a license (which is an agreement) and the licensing process (which is ongoing). I also covered the the three key parts of the licensing process – allowing others to use your IP, getting paid royalties from one or more licensees (otherwise known as recurring revenue), and retaining ownership of your IP. It’s the difference between selling one customer at a time and generating revenues from one or more markets simultaneously.

That’s the power of licensing. It enables a startup to magnify its revenue generating opportunities without the overhead risk and selling expenses.

The presentation wrapped up with some of the key reasons for when to use licensing, and a summary of why it’s a game changer strategy for startups.

You can view the presentation at this link.

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